China's Polypropylene Prices Sink to 18-Year Low Amid Prolonged Market Downturn

Market Overview

Over recent months, prices in China's polypropylene market have continued to decline, with the lowest spot market price reaching 6,300 yuan per tonne. The annual average price from January to November 2025 has stood at approximately 7,322 yuan per tonne, marking an all-time low for the past 18 years.

Analysis of recent trends indicates that China's polypropylene market has been entrenched in a prolonged downward cycle since 2011. While rebounds were recorded in 2014, 2018, 2022, and 2023, each recovery failed to surpass previous highs and was unable to break through the overarching downward pressure curve.

Futures Market Context

Data from the Dalian Commodity Exchange shows that polypropylene futures settlement prices hit a historic low of 5,658 to 5,762 yuan per tonne in March 2020, a drop primarily driven by a pandemic-induced contraction in consumer demand. Prices had previously fallen to the 5,400 to 5,874 yuan per tonne range in 2016. By these futures market benchmarks, current Chinese polypropylene prices have not yet reached historical lows.

Historical Price Trajectory

A review of historical daily price trends over the past 18 years shows the current market cycle commenced in 2021 and has now persisted for over four years. This prolonged downturn has driven China's polypropylene market from an initial price of 11,000 yuan per tonne down to its current level near 6,400 yuan per tonne, representing a cumulative decline exceeding 41%.

The sustained price decline has correspondingly eroded theoretical profit margins. Statistics indicate that China's theoretical polypropylene profit margin reached a loss of 3% in 2025, following annual losses recorded in 2021, 2022, and 2023.

Market Drivers and Correlations

Examining the correlation between propylene and polypropylene prices from 2009 to 2025 reveals that both generally exhibited similar downward oscillating trends. However, distinct divergences occurred in specific years, notably 2010, 2011, 2012, 2015, 2018, 2021, 2022, and 2024. From an annual perspective, polypropylene exhibits a weak correlation with its feedstock propylene. Instead, polypropylene price fluctuations are more significantly influenced by end-market consumption and maintain a close linkage with macroeconomic conditions.

A comparison of China's polypropylene prices with GDP growth rates from 2008 to 2025 reveals a high degree of alignment, with data fitting exceeding 70%. Long-term annual comparisons indicate the Chinese polypropylene market is highly susceptible to macroeconomic influences.

Supply-Demand Imbalance

A principal factor contributing to the price decline is a persistent supply-demand imbalance. Statistics indicate that China's polypropylene market will see over 20 million tonnes of new capacity added between 2021 and 2025, representing an average annual growth rate exceeding 11%. This significantly outpaces the macroeconomy's average annual growth rate of 5%. The mismatch between rapidly expanding supply and sluggish consumption is a primary driver of the market's weak performance.

Downstream Sector Challenges

Downstream polypropylene sectors, such as injection moulding, BOPP film, and plastic woven products, have long operated in fiercely competitive environments, with average industry operating rates below 50%. Despite the substantial scale of downstream demand, sustained losses among small and medium-sized enterprises over recent years have severely dampened production enthusiasm. While growth opportunities exist in sectors like pharmaceuticals, new energy, and automotive lightweighting, traditional applications in packaging and home appliances remain dominant. The slow expansion in these conventional sectors fails to balance the market's supply-demand dynamics.

The rise of coal-based polypropylene production has further intensified market competition. Coal-based polypropylene costs 500 to 1,000 yuan per tonne less than oil-based alternatives. Moreover, most coal-based olefin downstream facilities are integrated with polypropylene production, significantly impacting the supply side.

Outlook

The emergence of historically low prices in China's polypropylene market fundamentally stems from a severe supply-demand imbalance. Many enterprises have resorted to profit-sacrificing models to sustain basic production, perpetuating a vicious cycle.

In the short term, supply pressures are expected to ease as industry losses widen and maintenance activities increase. Longer-term, the sector will enter a period of deep consolidation. The advancement of 'anti-involution' policies and the phasing out of outdated capacity will become key variables for price stabilisation. China's polypropylene market may see over one-third of its capacity phased out in the future, which could help stabilise the market to some extent.